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United Continental full year capacity down 1.5%, revenue to reach USD4.5 billion

31-Dec-2012 11:47 AM

United Continental provided (27-Dec-2012) the following investor update for 4Q2012 and the full year 2012:

Capacity:

  • 4Q2012 consolidated system available seat miles (ASM) to decrease 4.2% as compared to the same period in the prior year. Weather, including Superstorm Sandy, impacted operations during 4Q2012 reducing year-over-year consolidated ASMs by approximately 1.5 ppts;
  • 4Q2012 consolidated domestic ASMs to decrease 4.1% and consolidated international ASMs to decrease 4.3% year-over-year.
  • For full year 2012, consolidated ASMs to decrease 1.5% year-over-year.

Revenue:

  • 4Q2012 2012 consolidated passenger revenue per available seat mile (PRASM) to increase between 0.5% and 1.5% and full year PRASM to increase between 1.7% and 1.9% year-over-year;
  • 4Q2012 cargo and other revenue to be between USD1.10 billion and USD1.15 billion and full year 2012 cargo and other revenue to be between USD4.50 billion and USD4.55 billion.

Non-Fuel expenses:

  • 4Q2012 consolidated cost per ASM (CASM), excluding profit sharing, third-party business expense, fuel and special charges, to increase 5.6% to 6.6% year-over-year;
  • 4Q2012 consolidated CASM, excluding profit sharing, third-party business expense, fuel and special charges, was negatively impacted by approximately 1.5 ppts due to weather-related capacity reductions, including the impact of Superstorm Sandy. Additionally, due to recent progress in negotiations for a joint collective bargaining agreement with the International Association of Machinists and Aerospace Workers, United made additional accruals not included in previous 4Q2012 consolidated CASM guidance;
  • For 2012, United expects consolidated CASM, excluding profit sharing, third-party business expense, fuel and special charges, to increase 3.2% to 3.6% year-on-year;
  • United expects to record approximately USD120 million of third-party business expense in the fourth quarter and USD300 million for the full year;
  • 4Q2012 and full-year third party business expense guidance is higher than Oct-2012 guidance due to a new contract to sell aircraft fuel from United to a third party. The new agreement is earnings-neutral but results in revenue and expense, specifically cost of sale, which is unrelated to the operation of the airline.

Fuel expenses:

  • United estimates its consolidated fuel price, including the impact of cash settled hedges, to be USD3.28 per gallon for the fourth quarter and USD3.27 for the full year based on the forward curve as of 19-Dec-2012.
  • Non-operating expenses:
  • United estimates 4Q2012 non-operating expense to be between USD165 million and USD175 million. For the full year, the Company expects nonoperating expense to be between USD760 and USD770 million.  

Profit sharing and share-based compensation:

  • United pays 15% of total GAAP pre-tax earnings, excluding special items and share-based compensation programme expense, as profit sharing to employees when pre-tax profit, excluding special items, profit sharing expense and share-based compensation program expense, exceeds USD10 million. Share based compensation expense for the purposes of the profit sharing calculation is estimated to be USD10 million in the fourth quarter and USD47 million for the full year 2012.

Capital expenditures and scheduled debt and capital lease payments

  • For 4Q2012, the Company expects approximately USD1.05 billion of gross capital expenditures and approximately USD785 million of net capital expenditures, excluding net purchase deposit refunds of USD150 million.
  • For the full year, excluding USD103 million of net purchase deposits paid, United expects approximately USD2.35 billion of gross capital expenditures and USD1.70 billion of net capital expenditures. 4Q2012 and full year net capital expenditures are higher than Oct-2012 guidance due to the timing of financing proceeds.
  • Scheduled debt and capital lease payments amount to USD0.3 billion for the fourth quarter and USD1.3 billion for the full year 2012. Including all debt prepayments, United expects debt and capital lease payments of USD1.5 billion in 2012. During 4Q2012, United elected to redeem the USD400 million outstanding of 9.875% Senior Secured Notes Due 2013 and the USD200 million outstanding of 12.000% senior second lien notes due 2013, to be redeemed on 01-Feb-2013 at full principle amount, plus any accrued and unpaid interest.

Liquidity position:

  • United expects to end 2012 with approximately USD6.9 billion in unrestricted liquidity comprised of approximately USD6.4 billion of unrestricted cash, cash equivalents and short-term investments and USD500 million in undrawn commitments under its revolving credit facility.

Taxes:

  • United currently expects to record minimal cash income taxes in 2012.[more - original PR]